SAN DIEGO—Developers need to be responsive to changes in demographics in order to be relevant or they will not be successful, said speakers at the Burnham-Moores Center for Real Estate at the University of San Diego's 19^th Annual Real Estate Conference here last week. The “Demographic Impacts on Real Estate Strategy and Design” panel said ignoring demographics when designing buildings and formulating a real estate strategy is simply a recipe for disaster.

Moderator Mike Neal, president and CEO of H.G. Fenton Co., said the real risk of ignoring demographics in real estate is obsolescence. He spoke of the classically defined demographic groups occupying real estate today—the Silent Generation, the Baby Boomers, Gen X, Gen Y and the Millennials—and how each has different needs and mindsets. Ultimately, the Baby Boomers and the Millennials are the two demographic groups that developers and real estate executives are focusing on today because they are also the two largest groups alive, but Millennials are the future.

“Millennials want to know about upward mobility in a company,” said Ed Capozzoli, VP of real estate and facilities for Qualcomm Technologies Inc. “Sustainability and salary are the next most-important things to them.”

To capitalize on the importance of sustainability to this group, Qualcomm has at least one building in San Diego where all 1,200 employees get natural light in their workspace, said Capozzoli. “All the windows are operable, and we are trying to use all the space in the building. It's incumbent upon us to pay attention to the needs and wants of Millennials.”

He added that Qualcomm is currently in the acquisition phase and plans to grow from 30,000 to 50,000 employees in the next five years. Also, all building amenities are test-marketed before being added to a building.

Mike Mahoney, SVP of development for ConAm Management Corp., said, “Millennials are driving everything. They outnumber Gen X by 10 million to 15 million people. They are attracted to a lifestyle, and they want flexibility right now and convenience.”

Mahoney said there has been a flight toward “urban light” apartment locations in the suburbs. “People want to live where they work, but they don't want to live across the street from a concrete tilt-up.” He suggested finding out where Millennials spend Saturday morning in order to discover what's truly important to them. “They are spending less time in units and more time outside and on social media.”

Mahoney also commented that apartment lobbies are now reflecting the look of hotel lobbies, where there's a hassle-free aspect to renting and access to kiosks where potential renters can find out more information about a property without having to speak to someone directly. “The prospective renter doesn't want to deal with you. He wants to deal with technology first, then contact you if he has questions. People like to talk to cell phones more than to people—there's been a dynamic shift.”

Design-wise, Millennials are attracted to multifamily properties that offer expansive great rooms, high-end fitness centers, business centers with collaboration tables and rooftop amenities like a rooftop dog run and fire pits. “You're selling the lifestyle,” said Mahoney.

When asked if it's risky to cater so much to one demographic group, Mahoney said that ultimately, “good locations, good design and convenience are pan-generational. I'm not concerned about designing too much for Millennials.”

Brad Geier, co-managing partner for Merlone Geier Partners, addressed how the Millennials have changed the retail sector, including how people shop. “Retail development needs to be responsive to changes in demographics in order to be relevant.”

Geier said important elements for retail today include proximity to transit, clustered uses and building in higher densities where there is infrastructure in place, which typically means urban and dense urban-infill locations where retail ends up being an amenity for tenants. “Lifestyle retail or experiential retail recognizes that shopping is a social experience. It's important to create places where people will connect in addition to shop. It's the confluence of the Internet with brick-and-mortar stores.”